Do you want to know what happened with Envestio? Consider this your information one-stop-shop where you can find anything that is known until now.
In the last few weeks, there have been quite some information, discussions, and comments on various blogs about the management switch of Envestio.
I want to put it all down to paper for you and objectively report about what information is available about the current situation of Envestio.
- From the 21st of January, Envestio’s website is down
- They claimed to be hacked
- No one has heard from them since
That sounds kind of suspicious, right? That’s what I was thinking.
Anyways, let’s go into what has happened with Envestio and what the current situation is.
What Happened With Envestio?
On the 21st of January, Envestio stated that the company website had been hacked and that several attacks have been done on their databases. The website completely disappeared from that moment on.
Several IT experts have concluded that the website didn’t disappear because of a DDOS attack or other hacking attacks. The website itself is simply deleted from its host.
The logic behind a hacking attack would be to still communicate with your customers through social media like Twitter, Facebook, and others. Nothing has happened and no word has been said.
Even if their social accounts were hacking, you could create a new social account and communicate to all investors and customers.
Do we think that Envestio has been hacked? Honestly, I don’t think so. I don’t know what they were thinking. If this is them trying to get away with this, I hope it is clear for them by now that investors are concerned and are taking action.
There has been no official confirmation nor denial of Envestio being hacked, so these are assumptions.
So what are the main concerns leading up to this?
The Main Concerns
We are all aware that peer-to-peer lending is risky and because of that we only want to put our money in platforms that are solid. When people are doubting that, groupthink and panic may start to occur. Let’s start with the main concerns and current situation of Envestio, and focus on what we know.
The main concerns that have been raised by others are regarding the change of owner and Chief Operational Officer (COO) of Envestio, plus the fear that the same thing will happen as did with Kuetzal.
The Kuetzal Situation
In late 2019, a lot of concerns arose about Kuetzal. There were quite some concerns about Kuetzal.
- Bad communication when the CEO suddenly changed in November 2019, questions start to arise.
- Up until that moment, all payments have been on time.
- There is general consensus that most projects seem legit.
- The real trouble began when it came to light that Kuetzal possibly worked with a non-existing petrol company. They have started an external audit on that company, let’s hope they will still follow up on that.
- The legal owner of Kuetzal named Viktoria Gordsak was hard to reach. Instead, instructions came from ‘Andrei’, who some believe is the same person who laundered 99,000 USD in 2010. This is not confirmed nor denied by Kuetzal.
- Many people tried to withdraw their money from the platform, which wasn’t possible since Kuetzal’s bank account was frozen because of all their charges.
- Kuetzal has stopped all operations.
It is still unclear whether or not Kuetzal is a scam and I’m not here to discuss this, but truth is that people are being careful with other platforms after something like this happens.
I completely understand that, which is why it’s important for other platforms to care about public opinion and how their investors perceive them.
Let’s go on and discuss the concerns about Envestio!
Change In Owner Envestio
Late 2019 Envestio was sold to a German investor named Arkadi Ganzin, who is the owner of an oil trading business and has working experience in the banking sector. Besides that, little information about him is known.
It is important for investors in the peer-to-peer loans of the Envestio platform to know what is going on. Why was the platform sold? Who is Arkadi Ganzin and what does he want Envestio to be in the future years?
Change In Chief Operational Officer (COO)
The main point of criticism on Envestio isn’t because of the owner change, but because of the COO change. Both are mentioned in Envestio’s press release (UPDATE 23 January: Envestio blog is also down).
When previous COO Evgeniy Kukin was leaving Envestio and a new COO was appointed, many red flags started to arise. People were having their eye on Envestio and wanted to know what was going on.
In order to calm the rumors, Envestio announced on the 15th of January that Evgeniy Kukin was returning to the position of COO. The new COO was appointed ‘Head of Sales’.
However, many people already did their research on the new COO and found something disturbing.
The concerns are about the new COO of Envestio, Eduard Ritsmann, and his involvement in ROSCH Innovations. ROSCH Innovations is a kinetic power plant, which seems to be a scam in and of itself. Mr. Ritsmann gave a presentation for ROSCH and supported their product. According to Mr. Ritsmann he has no affiliation with the company. He was doing the work out of personal interest and this should have nothing to do with Envestio.
However, if you’re affiliated with a company that may be a scam, people started to distrust him in the Envestio case.
If you want to read the conversation in more detail, I’d recommend you go here.
Bank Run And No Cash At Envestio
Because of all the rumors, investors started to have serious doubts and started to withdraw their money from their platform.
Normally a peer-to-peer platform has all investor non-invested funds on a separate bank account, making them able to give you your money back immediately when desired.
If your funds are already invested, you need to sell through a secondary market or wait until maturity of the loan.
HOWEVER, Envestio has a policy where you can buy loans back for a 5% discount. Meaning that you can get your invested money back at any time.
On paper, this sounds great. In reality, they never had the cash reserved to fund this kind of cash request.
Many people were given their money back and Envestio very proudly stated that they were able to meet everyone’s needs for their money back. BUT this is not the case, many people requesting their money back after the 12th of January never saw it.
More people started requesting their money back, resulting in a ‘bank run’ and funding problems. Envestio was never testing for a scenario like this.
On the16th of January 2020, Envestio made another statement, where the former COO Evgeniy Kukin will be returning to the position. Mr. Ritsmann continues to work for Envestio as Head of Sales in the meanwhile.
In the days between investors requesting their money back and their official announcement, Envestio has responded very immaturely to valid concerns. Their behavior was unprofessional and inappropriate.
Of course, they are under a lot of pressure, but responding to clients and customers should always be professional and polite.
Until the 21st of January, however, there has been constant communication from the side of Envestio, which is different from the silence from Kuetzal.
UPDATE: there has been no news since the 21st of January, this is not a great move.
Besides that, there has been another press release on the 21st of January about what has been going on.
Press Release 21st of January
“We proudly declare that till present moment Envestio managed to fulfill on time and in good faith all financial obligations to all contractual investors and borrowers, despite the very unfavorable situation in the crowdfunding market, provoked by the uncertainty and potential fail of Kuetzal platform.“
They have been able to execute all buybacks from investors, which we know now is not true. Many people have requested their money back and never got it.
“Simultaneously with the recent concerns within the industry, we tracked repeatedly various technical attempts targeted to influence dramatically on stability of Envestio platform. They were performed through hacker attacks on our web site and platform’s internal structure and database.”
Besides that, Envestio stated that their platform has been hacked on January 21st, 2020.
“Envestio strongly condemns any actions aimed at further destabilizing the current crowdfunding market situation and disrupting the activity of the Envestio platform, as these factors together can lead to an uncontrolled solvency crisis, influencing not only Envestio but also other industry participants.”
I do agree that at this moment, the biggest risk for Envestio is not communicating with their investors. The most important thing they can do now is to communicate and keep us up to date. UPDATE: lol this is exactly what they failed to do.
What Should Envestio Investors Do?
It is important to have an overview of all the loans that you’re investing in. Whatever the situation turns out to be, it’s important that you know in what projects you’re invested in.
IF something were to happen, you could show in which projects you have invested and what amount of money you should get back.
If there is additional information that you need, go to this Google Drive.
Besides that, you can file an official police report in Latvia on this website.
There are also two Telegram groups, called “EnvestioDiscussion” and “EnvestioUpdates”. You can download Telegram on Google Play or iTunes store. At this moment 1400 people joined and updates are done very regularly.
Official Warning By The European Crowdfunding Network
The European Crowdfunding Network (ECN) is a big name that has notified relevant authorities about Envestio on the 21st of January and on the 22nd of January.
The best action to take now is:
“Please be advised that as a consumer, with the current situation with both platforms, you are best advised to assume fraud or suspected crime and should make a relevant claim with the Estonian Police and Border Guard Board, which can be reached here: https://www.politsei.ee/en“
Besides that, more regulations will come to the European peer-to-peer and crowdlending market probably as of 2021.
All in all, this is more and more looking like a scam. I am not sure whether Envestio was planning on doing this, or they just panicked and got out.
Either way, the current situation of Envestio is far from good and they are going to have a hard time going forward.
I certainly hope that they will get their platform back up soon and can disprove any rumors that have been going around these days.
Let’s hope they keep communicating about the information they have and I’ll keep updating this post with more recent information!
Any questions or comments about the current situation of Envestio, let me know below!
Founder of Spark Nomad, Radical FIRE, Journalist
Expertise: Personal finance and travel content
Education: Bachelor of Economics at Radboud University, Master in Finance at Radboud University, Minor in Economics at Chapman University.
Over 200 articles, essays, and short stories published across the web.
Experience: Marjolein Dilven is a journalist and founder of Spark Nomad, a travel platform, and Radical FIRE, a personal finance platform. Marjolein has a finance and economics background with a master’s in Finance. She has quit her job to travel the world, documenting her travels on Spark Nomad to help people plan their travels. Marjolein Dilven has written for publications like MSN, Associated Press, CNBC, Town News syndicate, and more.